The BBC's Panorama programme has established that these accounts were actually a conduit to Prince Bandar for his role in the 1985 deal to sell more than 100 warplanes to Saudi Arabia.

The purpose of one of the accounts was to pay the expenses of the prince's private Airbus.

David Caruso, an investigator who worked for the American bank where the accounts were held, said Prince Bandar had been taking money for his own personal use out of accounts that seemed to belong to his government.

He said: "There wasn't a distinction between the accounts of the embassy, or official government accounts as we would call them, and the accounts of the royal family."

Mr Caruso said he understood this had been going on for "years and years".

"Hundreds of thousands and millions of dollars were involved," he added.

Investigation stopped

According to Panorama's sources, the payments were written into the arms deal contract in secret annexes, described as "support services".

They were authorised on a quarterly basis by the MoD.

Prince Bandar was Saudi ambassador to the US for 20 years

The payments were discovered during a Serious Fraud Office (SFO) investigation.

The SFO inquiry into the Al Yamamah deal was stopped in December 2006 by attorney general Lord Goldsmith.